- Warren Buffett is selling all of Berkshire Hathaway‘s newspaper publications to Lee Enterprises for $140 million, including the Omaha World-Herald in Nebraska and The Buffalo News in New York Buffett
Billionaire Warren Buffett plans to sell his newspaper business to Lee Enterprises.
He is selling all of Berkshire Hathaway’s newspaper publications to Lee Enterprises for $140 million, including the Omaha World-Herald in Nebraska and The Buffalo News in New York Buffett, a lifelong fan of newspapers, but he has been saying for several years that he expects most of them to continue on their diminishing path, except for a handful of national newspapers like The New York Times and The Wall Street.
The deal includes 31 daily newspapers in 10 states as well as 49 paying weekly web platforms and 32 other print items. Some newspapers include the Oklahoma Tulsa Times, and the North Carolina Winston-Salem News. Lee will enter into a 10-year lease for BH Media’s real estate as part of the agreement.
Since July 2018 Lee has controlled the BH Media publications. Analyst Ken Doctor, who writes the Newsonomics blog, said after hiring Lee to oversee most of her reports, this sale is a logical step for Berkshire.
“That was the first step in gaining some efficiency of scaled management. Further, it was a clear acknowledgment by Warren Buffett, a longtime major supporter the press, that he no longer believed the print newspaper business could be turned around,” Doctor said.
Rick Edmonds, a media business analyst with The Poynter Institute, said this deal reinforces that the newspaper industry is out of favor with most investors.
“It’s a further unfortunate event for an industry that’s already been having a lot of tough times,” Edmonds said.
The deal will increase Lee’s size significantly. The company said its portfolio will grow to 81 daily papers and nearly double its audience size, The deal is expected to close in mid-March.
“This is a compelling and transformative transaction for Lee,” said Mary Junck, Lee’s chairman. “It both refinances our long-term debt on attractive terms and provides new revenue opportunities as well as operational synergies across an expanded portfolio.”
Buffett, the chairman, and CEO of Berkshire said he had long respected Lee and his friend, Charlie Munger.
“We have little interest in selling the company to anyone else for one simple reason: We feel that Lee is best placed to deal with the complexities of the market,” Buffett said. Newspapers make up a small part of Berkshire Hathaway, which owns an array of more than 90 businesses and has major investments in firms such as Coca-Cola Co., Apple, and Wells Fargo. “I think Buffett is trying to do something.
Berkshire Hathaway provides Lee with approximately $576 million in long-term funding of 9 percent, which it will use to pay for the Berkshire properties and refinance Lee’s approximately $400 million in existing debt. After the deal closes, Berkshire will be Lee’s primary lender.
Lee said it expects to eliminate about $20 million in annual costs as part of the deal, primarily through cutting the newspaper administrative expenses. Lee also said it expects revenue to increase by about $5 million by concentrating on increasing digital sales and improvements in subscription pricing.